Datalex shares fell 7 per cent to 40 cents on poor third quarter figures, company caution about revenue prospects for the next two quarters and the extension of its restructuring programme. Shares in the travel software supplier are now well off their 2001 high of €6.30.
Chief executive Mr Neil Beck said the target of breaking even by the first quarter of 2002 had been abandoned as "unrealistic". A new target was not set because there were too many variables in travel markets still suffering from the effects of the September 11th terrorist attacks in the US, he said.
Third-quarter figures showed a 20 per cent drop in total revenue to $5.7 million (€6.4 million) from $7.1 million in the second quarter, and a 43 per cent fall on the corresponding quarter of 2000. Product revenue dropped by 43 per cent to $800,000 for the three months to the end of September from $1.3 million in the previous quarter, while service revenue was down 13 per cent to $4.9 million. The quarter loss per share was $0.78.
Describing the outcome as disappointing, Mr Beck said it reflected the damage caused by the September 11th attacks to an already distressed US economy. The company, founded by chairman, Mr Neil Wilson, was cautious on its revenue prospects for the next two quarters - sector companies Amadeus and Sabre have already cut their forecasts. But he expressed confidence in the company's fundamental business model and strategy, and said it would continue to streamline operations and functions. "Our healthy cash balance, the savings from our cost-reduction programme and the careful management of existing customer relationships leave us in a stronger position to aggressively pursue new market opportunities in 2002," he said.
The results included a $1 million restructuring charge reflecting earlier redundancies and closures, with a further charge of $600,000 expected in the current quarter. Additional restructuring measures to those announced in August have meant a further cut in employee numbers to 267 from 379 (after an earlier reduction of 100). Datalex said its quarterly cost base would fall from over $15.1 million in the second quarter to about $9.2 million by the first quarter of 2002.
The results included an additional bad debt charge of $1.8 million to cover problem accounts. A non-cash impairment charge reduced the value of intangible assets by $39.8 million - this included a $21 million write-off of the residual goodwill on the May 2000 Sight & Sound acquisition.
